A man waves a Greek flag at Syntagma Square in Athens, Greece. (Photographer: Simon Dawson/Bloomberg)

Greece Credit Rating Raised by S&P as Growth Outlook Improves

(Bloomberg) -- Greece’s sovereign credit rating was raised one level by S&P Global Ratings, helping the government’s plans to continue a bond-market comeback this year.

The country’s long-term foreign currency debt was upgraded to B with a positive outlook from B-, S&P said in a statement on Friday. The new ranking remains five levels below investment grade.

“Greece’s growth and fiscal outlooks have improved alongside a labor market recovery and amid a period of relative policy certainty,” S&P said. “The positive outlook on Greece reflects further upside rating potential from the policy and financing environment over the next year.”

Euro-area finance ministers meeting on Monday will assess Greece’s compliance with its bailout terms, and could sign off on loan disbursements of about 6.7 billion euros ($8.2 billion). The government in Athens hopes to follow that up with a bond sale in the coming weeks as it tries to build up a cash buffer for when the bailout expires in August.

Read more: Greece’s 10-Step Road Map to Bailout Program Exit in August

Greek bonds have rallied since December as talks with euro-area and International Monetary Fund officials have progressed without the drama seen in previous bailout reviews. The yield on benchmark 10-year bonds has fallen to 3.83 percent from more than 7 percent a year ago.

“Policy uncertainty in Greece has receded since 2015 and absent any large shifts in the policymaking environment -- which have in the past weighed considerably on growth -- we anticipate a stronger economic recovery will take root,” S&P said.

The upgrade is the first time in two years that S&P has changed Greece’s rating. Fitch Ratings upgraded Greece to B- in August, while Moody’s Investors Service rates the country Caa2. Each is below the junk threshold.

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